S.Korea inflation hits 13-yr high, fans rate hike expectations

A avenue vendor counts his cash on the Namdaemun Market in Seoul, South Korea, Might 30, 2017. REUTERS/Kim Hong-Ji

SEOUL, Might 3 (Reuters) – South Korea’s shopper inflation quickened excess of forecast and hit a greater than 13-year excessive in April, boosting expectations within the bond marketplace for extra central financial institution rate of interest rises this 12 months.

The Statistics Korea information confirmed the buyer value index (CPI) rose 4.8% in April from a 12 months earlier than, dashing up from a 4.1% rise within the earlier month and much quicker than a 4.4% rise tipped in a Reuters survey. learn extra

It even exceeded the very best forecast among the many 11 economists within the survey and marked the quickest annual progress since October 2008, whereas standing above the central financial institution’s 2% goal for a thirteenth consecutive month.

The yield on the benchmark 10-year treasury bonds rose as a lot as 5.4 foundation factors to three.426%, the very best since Might 14, 2014, because the inflation information cemented the case for continued coverage tightening.

The Financial institution of Korea (BOK) convened an inside assembly of officers to assessment the inflation information and the presiding deputy governor burdened the necessity for authorities to handle inflation expectations.

Analysts, nonetheless, haven’t as but adjusted their coverage expectations following the info.

“We’re not altering our view for now as the info exhibits inflation was led by the provision elements,” stated Ahn Jae-kyun, a fixed-income analyst at Shinhan Monetary Funding. “I favor to attend and see how the demand-side pattern will appear to be in coming months.”

Core inflation, which measures value progress excluding power and meals, sped up modestly to three.1% on a year-on-year foundation in April from 2.9% in March and marked their highest since Might 2009.

South Korea’s central financial institution final month raised its benchmark rate of interest by 25 foundation factors to 1.50% in a shock transfer because it ramped up the combat in opposition to inflation. learn extra

It marked the fourth enhance of the BOK’s base price because it kicked off a coverage tightening cycle in August final 12 months as one of many first central banks in high-income international locations to take action.

It holds its subsequent coverage board assembly on Might 26, which is able to mark the debut for Governor Rhee Chang-yong because the chair of the board and the primary assembly since incoming President Yoon Suk-yeol begins work on Might 10.

Reporting by Jihoon Lee and Choonsik Yoo; Enhancing by Sam Holmes

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